Modernization Loan – who can apply?


If you are in possession of property in the form of a house, an apartment or a rented property, there is an obligation to maintain it. In many cases, windows or heating must be replaced, which is then considered modernization. If this is a rented property, the costs for this can be passed on to the rent.

In contrast, if you live in the house or apartment that needs modernization, the costs must be borne alone. But no matter which variant, the costs for modernization work must always be paid in advance, since they can only be reimbursed by the following rental payments.

Not enough equity capital?

Not enough equity capital?

In such cases there is a loan for modernization. Banks and lenders usually offer this type of loan for less than an installment loan, for example. You can get a loan for modernization from a small amount starting at USD 2,500.00, which is not the case with mortgage lending. Normally, the last three salary certificates are sufficient for the approval of the lender. Even if it does not happen so often, the bank can also request an entry in the land register, then a comparison with other banks can be useful. Finally, the costs of registration and the notary are borne by the borrower and can be avoided with a comparison

Bad credit rating – what now?

Bad credit rating - what now?

The bad credit rating does not necessarily mean that a loan for modernization is refused. The way to the goal is difficult but not impossible. The most important role here is what causes the poor creditworthiness. Many different circumstances come together, such as a negative credit entry, or whether the applicant is self-employed, part-time or for a limited time. Most banks take a lack of permanent employment and low income or income from transfer payments to refuse a loan.

The problem here is that every loan refusal is entered in the credit checker and the initial situation deteriorates further. The right strategy should make a loan rejection unlikely. The first step in improving the chances of getting a loan for modernization is the household bill. If this has a clear surplus of income, it can be counteracted in the event of a rejection due to an insufficient budget surplus. If it is not sufficient, guarantors or property guarantees can be requested.

Since this is a modernization loan, ownership would be possible in this case. This surplus can be increased, for example, by terminating unnecessary contracts. Furthermore, there should be no direct debits on the checking account due to insufficient funds or collections from a debt collection agency. An increasing overdraft facility should also be avoided. If the current account has a surplus in the amount that is planned as the installment amount, this is a good sign for the clerk. If none of these measures work, a family loan could be the last resort.